What happened
Shares of Brazilian airline Gol Linhas Aereas Inteligentes (GOL +0.00%) popped more than 10% in early trading Monday morning, and remain up a healthy 8.6% as of 11:35 a.m. EDT. But why is Gol stock up at all?
That's not immediately clear.
With nearly 515,000 reported coronavirus infections and more than 29,000 related deaths, Brazil remains a hot spot for COVID-19. That's not really great news for Brazil, or for airline stocks in general, or for Gol in particular.
Image source: Getty Images.
So what
That being said, Gol stock got hit last week when it was reported that the bankruptcy of another airline, Chile-based LATAM Airlines (NYSE: LTM), could complicate Brazil's plan to grant a financial bailout to airlines flying into and out of Brazil. In addition to LATAM, Gol joins Brazilian flyer Azul (AZUL +0.00%) in seeking a bailout.
Reuters noted that complications arising from LATAM's bankruptcy could make it harder to iron out the details of a bailout for the other two carriers until at least late June. The risk that Gol might not survive that long, and might follow LATAM into bankruptcy court before Brazil has a chance to rescue it, presumably weighed on Gol shares last week.
Now what
Can Gol survive long enough for Brazil to bail it out? According to data from S&P Global Market Intelligence, the company has more than $300 million in cash available to it, but more than $3.1 billion in debt -- not the best situation to be heading into a recession. That being said, LATAM's debt burden is even bigger ($9.1 billion, net of cash on hand), and Azul is in a somewhat worse position than Gol as well (with $3.6 billion in net debt).
Regarding debt at least, it looks to me like Gol might actually be the strongest of the three airlines -- and that could be why investors are giving Gol stock a second look this morning.
